Irrigation investment and management in Asia : trends, priorities, and policy directions

The general economic case for increased public investment in new irrigation is examined, the potential and cost-effectiveness for improvement of existing irrigation systems are assessed, issues and policies related to the expansion of private investment are discussed, and policy implications for irrigation investment and management strategy in Asia are presented. The paper concludes that the substantial cutback in public investment during the 1980"s was a largely appropriate response to declining world rice and wheat prices and the rapidly increasing capital costs of irrigation. However, a modestly higher shadow price for rice and wheat should be utilized in evaluation of irrigation and other investments, due to the endogeneity of world prices relative to irrigation investments and due to asymmetric risk concerns. With higher shadow prices, the portfolio of cost-effective irrigation projects would increase somewhat compared to projected levels, moderately boosting expenditures on irrigation. Selective investment in irrigation rehabilitation, management reforms, and other interventions to improve the efficiency and performance of irrigation systems should continue to have an important role in future development in Asian irrigation. However, the rates of return and aggregate production and income benefits of these investments do not appear to be as high as many observes have estimated. Careful identification of systems to be rehabilitated and selection of high-payoff points of intervention within the systems would improve the cost-effectiveness of these interventions. Expansion of private investment in irrigation, particularly tubewells, is very promising. While the government role in encouraging private investment should be indirect -- consisting primarily of sustenance of an appropriate legal/institutional environment and provision of adequate public goods and services -- it is nevertheless critical to expansion of private investment. Targeted investments in public goods, such as energy and roads, which can facilitate the expansion of conjunctive use of tubewells and canal irrigation, should be particularly productive due to the largely unexploited positive externalities arising from conjunctive use. (Author abstract)